PRECIOUS-Gold holds steady amid softer dollar; markets eye ECB meet

Reuters Staff

3 Min Read

* Spot gold may drop to $1,320-$1,325/oz range -technicals
* ECB rate decision due at 1145 GMT
* Mario Draghi holds news conference at 1230 GMT
(Adds detail, updates prices)
By Apeksha Nair
Sept 7 (Reuters) - Gold held steady on Thursday, supported
by a weaker dollar and lingering concerns over North Korea, as
markets awaited the outcome of a European Central Bank (ECB)
policy meeting later in the day.
Spot gold was unchanged at $1,333.90 per ounce at
0624 GMT, after easing 0.3 percent in the previous session.
U.S. gold futures for December delivery were also
flat at $1,339.10.
"The major event for today is the ECB meeting for traders,
and if the ECB delivers any unexpected message during the
conference that will spook the market and the gold price could
benefit," said Naeem Aslam, chief market analyst, Think Markets.
The dollar was subdued on Thursday and the euro stood firm
ahead of the outcome of the ECB gathering, where President Mario
Draghi is expected to start laying the groundwork to withdraw
monetary stimulus.
"The odds of geopolitical tensions escalating further are
very high. If North Korea does another missile test, it will
trigger risk-off trade and the yellow metal could benefit,"
Aslam added.
President Donald Trump on Wednesday warned that the U.S.
would no longer tolerate North Korea's actions but said the use
of military force against Pyongyang will not be his "first
choice".
South Korean protesters clashed with thousands of police
over the deployment of a defence system aimed at countering
potential North Korean missile attacks, while China and the
United States discussed options to rein in Pyongyang.
"The market is likely to continue focusing on geopolitical
tensions, but it will start to shift focus to the Federal
Reserve meeting in September, looking for details on reducing
the balance sheet," said Samson Li, an analyst with Thomson
Reuters-owned metals consultancy GFMS.
The two-day Federal Open Market Committee meeting (FOMC) is
due to begin on Sept. 19 and the U.S. central bank is widely
expected to leave rates unchanged.
"I expect some downward pressure on gold starting next week
and a rebound in the dollar short-term" Li said.
Higher interest rates tend to boost the dollar and push up
bond yields, putting pressure on gold prices by increasing the
opportunity cost of holding non-yielding bullion.
Spot gold may drop into a range of $1,320-$1,325 per ounce
as it has failed to break resistance at $1,345, Reuters
technical analyst Wang Tao said.
Among other metals, silver was down 0.3 percent at
$17.77 an ounce, while platinum fell 0.4 percent to
$998.80 an ounce.
Palladium slipped 0.1 percent to $938.33 an ounce.
(Reporting by Apeksha Nair in Bengaluru; Editing by Richard
Pullin and Joseph Radford)